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Buy These 2 Technology Services Stocks to Tap Recent Northbound Trend
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Key Takeaways
Coherent is benefiting from AI datacenter demand and a strategic NVIDIA partnership through 2030.
Coherent expects fiscal 2027 first-quarter revenue to reach $2.2-$2.4 billion, up 45.6% year over year.
Cerebras' core revenue jumped 103%, while its data center capacity exceeds 600 megawatts.
The technology services industry is mature, with demand for services in good shape. The global shift toward digitization creates opportunities in various markets, including 5G and artificial intelligence (AI). Companies are adopting generative AI, agentic AI, machine learning (ML) and data science faster to gain a competitive advantage.
However, this space has lost momentum in 2026 due to several macroeconomic concerns and geopolitical conflicts. Despite these headwinds, we have narrowed our search to two AI-led technology services stocks with a favorable Zacks Rank that have shown northward movement in the volatile past month.
The chart below shows the price performance of our two picks in the past month.
Image Source: Zacks Investment Research
Coherent Corp.
Coherent sits at the center of the AI optics buildout, with strong demand visibility supported by long-term agreements. COHR is positioned at the heart of the AI datacenter build-out, which has driven sustained strength in Datacenter and Communications.
COHR provides highly scalable datacom transceivers, Co-Packaged Optics solutions, and high-speed VCSELs engineered to boost data center bandwidth. COHR is widening its datacenter opportunity through optical circuit switching (OCS), co-packaged optics (CPO)/ near-packaged optics (NPO), multi-rail and thermal solutions. OCS already contributes to revenues.
COHR and NVIDIA Corp. (NVDA - Free Report) entered into a strategic partnership focusing on next-generation optical technology and silicon photonics for AI data centers. NVDA will invest $2 billion in COHR for a multiyear agreement up to 2030.
Strong Outlook
For the first quarter of fiscal 2027, Coherent expects revenues of $2.2 billion to $2.4 billion. The $2.3 billion midpoint implies approximately 12.4% sequential growth and about 45.6% growth from first-quarter fiscal 2026 revenues of $1.58 billion. Guidance established a credible path toward a quarterly revenue run rate above $3 billion by the fiscal 2027 end.
The company expects an adjusted gross margin of 39-41.5%. Its 40.5% midpoint would represent a modest 30-basis-point sequential improvement. Projected adjusted EPS of $1.85-$2.05 implies midpoint growth of 12.1% from the fiscal fourth quarter and approximately 68% year over year.
Solid Estimate Revisions
Coherent has an expected revenue and earnings growth rate of 50% and 67.2%, respectively, for the current year (ending June 2027). The Zacks Consensus Estimate for the current year’s earnings has improved 11.9% in the last 60 days.
COHR has an expected revenue and earnings growth rate of 35% and 46.1%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 0.4% in the last 30 days.
Image Source: Zacks Investment Research
Robust Price Upside Potential
The short-term average price target of brokerage firms represents an increase of 29% from the last closing price of $321.52. The brokerage target price is currently in the range of $280-$500. This indicates a maximum upside of 55.5% and a downside of 12.9%.
Cerebras Systems Inc.
Cerebras Systems’ wafer-scale design continues to address chip-to-chip communication and memory bottlenecks in AI inference. CBRS’ WSE-3 avoids HBM, CoWoS packaging and 3-nanometer fabrication, reducing exposure to components that management says remain supply constrained.
Cerebras’ relationships with OpenAI, Amazon.com Inc. (AMZN - Free Report) and Advanced Micro Devices Inc. (AMD - Free Report) are expanding its role in high-speed inference. Remaining performance obligations (RPO) reached $25.4 billion as of June 30, 2026.
CBRS is shifting toward a recurring AI infrastructure model as cloud adoption expands. In second-quarter 2026, core revenues jumped 103% year over year to $209.9 million, while core cloud and other services revenues increased 287% to $127.7 million. Hardware revenues grew 17% year over year to $82.1 million.
Strong Outlook
For the third quarter of 2026, CBRS expects core revenues to be in the range of $214-$216 million. Core gross margin is projected between 38% and 40%, while core operating margin is expected between negative 25% and negative 23%.
For 2026, CBRS raised core revenue guidance to $880-$890 million. Core gross margin is expected to be 41-43%, while core operating margin is projected between negative 19% and negative 17%. Management expects core revenues to more than triple in 2027.
Cerebras has secured more than 600 megawatts of data center capacity that is either live or under contract for delivery by the end of 2027. Its pipeline of additional data center opportunities is measured in gigawatts, as available capacity remains a key constraint on revenue growth. Manufacturing capacity is expected to increase more than tenfold in 2026.
Solid Estimate Revisions
Cerebras has an expected revenue and earnings growth rate of more than 100% each, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 29.2% in the last 60 days.
Image Source: Zacks Investment Research
Robust Price Upside Potential
The short-term average price target of brokerage firms represents an increase of 38.5% from the last closing price of $208.49. The brokerage target price is currently in the range of $209-$330. This indicates a maximum upside of 58.3% and no downside.
View the Zacks #1 Rank List
Image: Shutterstock
Buy These 2 Technology Services Stocks to Tap Recent Northbound Trend
Key Takeaways
The technology services industry is mature, with demand for services in good shape. The global shift toward digitization creates opportunities in various markets, including 5G and artificial intelligence (AI). Companies are adopting generative AI, agentic AI, machine learning (ML) and data science faster to gain a competitive advantage.
However, this space has lost momentum in 2026 due to several macroeconomic concerns and geopolitical conflicts. Despite these headwinds, we have narrowed our search to two AI-led technology services stocks with a favorable Zacks Rank that have shown northward movement in the volatile past month.
The companies are: Coherent Corp. (COHR - Free Report) and Cerebras Systems Inc. (CBRS - Free Report) . Each of our picks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our two picks in the past month.
Image Source: Zacks Investment Research
Coherent Corp.
Coherent sits at the center of the AI optics buildout, with strong demand visibility supported by long-term agreements. COHR is positioned at the heart of the AI datacenter build-out, which has driven sustained strength in Datacenter and Communications.
COHR provides highly scalable datacom transceivers, Co-Packaged Optics solutions, and high-speed VCSELs engineered to boost data center bandwidth. COHR is widening its datacenter opportunity through optical circuit switching (OCS), co-packaged optics (CPO)/ near-packaged optics (NPO), multi-rail and thermal solutions. OCS already contributes to revenues.
COHR and NVIDIA Corp. (NVDA - Free Report) entered into a strategic partnership focusing on next-generation optical technology and silicon photonics for AI data centers. NVDA will invest $2 billion in COHR for a multiyear agreement up to 2030.
Strong Outlook
For the first quarter of fiscal 2027, Coherent expects revenues of $2.2 billion to $2.4 billion. The $2.3 billion midpoint implies approximately 12.4% sequential growth and about 45.6% growth from first-quarter fiscal 2026 revenues of $1.58 billion. Guidance established a credible path toward a quarterly revenue run rate above $3 billion by the fiscal 2027 end.
The company expects an adjusted gross margin of 39-41.5%. Its 40.5% midpoint would represent a modest 30-basis-point sequential improvement. Projected adjusted EPS of $1.85-$2.05 implies midpoint growth of 12.1% from the fiscal fourth quarter and approximately 68% year over year.
Solid Estimate Revisions
Coherent has an expected revenue and earnings growth rate of 50% and 67.2%, respectively, for the current year (ending June 2027). The Zacks Consensus Estimate for the current year’s earnings has improved 11.9% in the last 60 days.
COHR has an expected revenue and earnings growth rate of 35% and 46.1%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 0.4% in the last 30 days.
Image Source: Zacks Investment Research
Robust Price Upside Potential
The short-term average price target of brokerage firms represents an increase of 29% from the last closing price of $321.52. The brokerage target price is currently in the range of $280-$500. This indicates a maximum upside of 55.5% and a downside of 12.9%.
Cerebras Systems Inc.
Cerebras Systems’ wafer-scale design continues to address chip-to-chip communication and memory bottlenecks in AI inference. CBRS’ WSE-3 avoids HBM, CoWoS packaging and 3-nanometer fabrication, reducing exposure to components that management says remain supply constrained.
Cerebras’ relationships with OpenAI, Amazon.com Inc. (AMZN - Free Report) and Advanced Micro Devices Inc. (AMD - Free Report) are expanding its role in high-speed inference. Remaining performance obligations (RPO) reached $25.4 billion as of June 30, 2026.
CBRS is shifting toward a recurring AI infrastructure model as cloud adoption expands. In second-quarter 2026, core revenues jumped 103% year over year to $209.9 million, while core cloud and other services revenues increased 287% to $127.7 million. Hardware revenues grew 17% year over year to $82.1 million.
Strong Outlook
For the third quarter of 2026, CBRS expects core revenues to be in the range of $214-$216 million. Core gross margin is projected between 38% and 40%, while core operating margin is expected between negative 25% and negative 23%.
For 2026, CBRS raised core revenue guidance to $880-$890 million. Core gross margin is expected to be 41-43%, while core operating margin is projected between negative 19% and negative 17%. Management expects core revenues to more than triple in 2027.
Cerebras has secured more than 600 megawatts of data center capacity that is either live or under contract for delivery by the end of 2027. Its pipeline of additional data center opportunities is measured in gigawatts, as available capacity remains a key constraint on revenue growth. Manufacturing capacity is expected to increase more than tenfold in 2026.
Solid Estimate Revisions
Cerebras has an expected revenue and earnings growth rate of more than 100% each, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 29.2% in the last 60 days.
Image Source: Zacks Investment Research
Robust Price Upside Potential
The short-term average price target of brokerage firms represents an increase of 38.5% from the last closing price of $208.49. The brokerage target price is currently in the range of $209-$330. This indicates a maximum upside of 58.3% and no downside.